Business Purchases That Are Tax Deductible
Every business owner is obligated to pay taxes, but this isn't to say that deductibles aren't to be accounted for. In fact, it is highly recommended that all business owners take time to understand what kind of tax deductions they qualify for and how much. This way, they can save extra money during tax season, ensuring that they still meet their tax obligations while enjoying maximum savings.
That being said, if you're a business owner who isn't sure what kind of deductions exist that you can be eligible for, take note of the following business purchases that can be deducted:
1. Machine Costs
Machines can easily cost thousands of pounds to purchase, and this cost goes even higher when maintenance is taken into the equation. Fortunately for you, if you've invested in any machines, then you can deduct the cost of "plant and machinery" equipment. This includes manufacturing equipment, office equipment, and even computing equipment, all of which are bought under the company's name and the invoices are kept to prove this. Keep in mind that only up to £200,000 can be claimed from this each year.
2. Travel Expenses
Travelling for entertainment won't count as a business expense, but it can be counted if the travelling is done for commercial reasons. However, this doesn't count for travel going to the "normal place of work," which could be a co-working space, a studio, a rented office, and the like. However, if you are travelling away from your workplace still for business reasons, this can be deducted. These deductions can be from things like car hire and subsistence costs to hotel expenses and taxi fares. Even incidental overnight costs can be deducted, and such costs include dry cleaning, phone calls, wifi costs, and such.
3. Telephone Costs
While not as common today as it was many years ago, if you still have landlines for your company, you can deduct the cost of using them. Keep in mind that this will only apply to landline phones used in your home that was subject to business calls. Only those specific calls will be tax-deductible. Other costs like line rental will not be counted.
4. Home Office Expenses
Even if you're running your business straight from home, there are many expenses that you are eligible for. In fact, you can claim up to £4 a week without having to provide any receipt or documentation. However, if you are running a limited company, fixed expenses cannot be claimed. Additionally, if you own the home and has dedicated a specific room for office use, you might lose your eligibility for the Private Residence Relieve on that part of the room. This can lead to a Capital Gains Tax bill if you do decide to sell the house.
While the monthly savings might not seem like much for any of these deductions, all of them combined and summed up for a year can help you see just how much you are saving. As a business, one of your main goals is to cut down on costs as much as possible to push up your bottom lines. Whether you're saving £4 a week or £200,000 a year, all of that saving is going to accumulate, allowing you to dedicate that money into other aspects of the company to grow it further! That being said, if you're having trouble identifying what you can tax deduct, we recommend that you hire an accountant to assist you. With their expertise, all tax deductions will be identified and utilised to help you maximise savings during the dreaded tax season!
1 to 1 Accountants is an accountancy company in the UK, serving small businesses and freelancers to help them stay on top of their business finances. If you are looking for accountancy services to help you maximise tax deductions, work with us today!